Supreme Court acquits accused in cheque bounce case, invoking Article 142: Rajendra Anant Varik vs. Govind B. Prabhugaonkar (2025)

Table of Contents

Introduction

Date of the Judgment: May 06, 2025

Citation: 2025 INSC 633

Judges: Vikram Nath, J. and Sandeep Mehta, J.

Can the Supreme Court use its powers to provide complete justice when an accused has already paid the cheque amount in a case involving Section 138 of the Negotiable Instruments Act? The Supreme Court addressed this question in a recent case, focusing on whether to compound the offence after the accused had already compensated the complainant.

In Rajendra Anant Varik vs. Govind B. Prabhugaonkar (2025), the Supreme Court acquitted the accused, who had been convicted under Section 138 of the Negotiable Instruments Act, after noting that the accused had already paid the cheque amount and a compensation fine. The Court invoked its powers under Article 142 of the Constitution of India to compound the offence, providing a conclusion to the protracted litigation.

The judgment was delivered by a bench comprising Justice Vikram Nath and Justice Sandeep Mehta.

Case Background

The case originated from a complaint filed under Section 138 of the Negotiable Instruments Act, 1882, following the dishonor of a cheque. The trial Court convicted the accused, Rajendra Anant Varik. However, the First Appellate Court reversed this decision, acquitting the accused on the grounds that the complainant, Govind B. Prabhugaonkar, was engaged in money-lending activities without a valid license, violating the Goa Money-Lenders Act, 2001.

Subsequently, the High Court of Judicature at Bombay at Goa overturned the First Appellate Court’s judgment and restored the trial Court’s conviction. The High Court directed the accused to pay Rs. 2,00,000 as compensation to the complainant and an additional Rs. 30,000 as costs, with a default sentence of three months of simple imprisonment. Aggrieved by this decision, the accused appealed to the Supreme Court.

Timeline:

Date	Event
January 2012 to July 2013	Accused took a loan from the complainant and allegedly returned the entire amount.
August 5, 2016	The trial Court convicted the accused under Section 138 of the Negotiable Instruments Act.
February 6, 2017	The First Appellate Court allowed the appeal filed by the accused and acquitted him.
January 7, 2023	The High Court reversed the First Appellate Court’s judgment and restored the trial Court’s conviction.
May 6, 2025	The Supreme Court allowed the appeal, acquitting the accused by compounding the offence under Article 142 of the Constitution of India.

Course of Proceedings

The trial Court convicted the accused under Section 138 of the Negotiable Instruments Act. The First Appellate Court reversed this conviction, acquitting the accused based on violations of the Goa Money-Lenders Act, 2001, by the complainant. The High Court then overturned the First Appellate Court’s decision, reinstating the conviction and imposing a compensation of Rs. 2,00,000 and costs of Rs. 30,000. The accused then appealed to the Supreme Court.

Legal Framework

The legal framework relevant to this case includes:

Section 138 of the Negotiable Instruments Act, 1882: This section deals with the offence of dishonor of a cheque for insufficiency of funds.
Section 357 of the Code of Criminal Procedure, 1973: This section empowers the court to order compensation to be paid to the victim out of the sentence imposed on the offender.
Article 142 of the Constitution of India: This article grants the Supreme Court the power to pass orders necessary for doing complete justice in any cause or matter pending before it.

Arguments

Accused-Appellant’s Argument:

The accused-appellant contended that he had returned the entire loan amount to the complainant-respondent between January 2012 and July 2013.
He further submitted that since the cheque amount had been returned with the applicable interest, he should be acquitted by compounding the offence.

Respondent-Complainant’s Argument:

No one appeared on behalf of the respondent-complainant despite the service of notice. Therefore, the court did not have the benefit of hearing the complainant’s arguments.

Issues Framed by the Supreme Court

Whether the High Court, while reversing the acquittal of the accused-appellant, properly considered the applicability of the Goa Money-Lenders Act, which provided a valid defense for the accused-appellant.
Whether the Supreme Court should exercise its powers under Article 142 of the Constitution of India to compound the offence, considering that the accused-appellant has already paid the cheque amount and the compensation imposed by the trial Court.

Treatment of the Issue by the Court: “The following table demonstrates as to how the Court decided the issues”

Issue	How the Court Dealt with It
Applicability of the Goa Money-Lenders Act	The Court noted that the High Court did not adequately address the applicability of the Goa Money-Lenders Act, which was a valid defense available to the accused-appellant.
Exercise of powers under Article 142	The Court, considering that the accused-appellant had already paid the cheque amount and the fine, exercised its powers under Article 142 of the Constitution of India to compound the offence and acquit the accused-appellant.

Authorities

The Court considered the following legal provisions:

Article 142 of the Constitution of India: This article was considered for its provision enabling the Supreme Court to pass orders necessary for doing complete justice.
Section 138 of the Negotiable Instruments Act, 1882: This section was the basis of the initial complaint and conviction, but the Court used its powers to compound the offence.

Judgment

Submission by the Parties	How Each Submission Was Treated by the Court
Accused-Appellant’s submission that he had returned the entire loan amount and should be acquitted.	The Court accepted this submission, noting that the accused had already paid the cheque amount and compensation, and compounded the offence under Article 142.
The High Court did not advert to the important issue regarding applicability of the Goa Act which provided a valid defense available to the accused -appellant.	The Court agreed with this submission.

What weighed in the mind of the Court?

The Supreme Court’s decision to acquit the accused in Rajendra Anant Varik vs. Govind B. Prabhugaonkar (2025) was primarily influenced by the fact that the accused had already paid the cheque amount and the compensation imposed by the trial Court. The Court also considered that the High Court had not adequately addressed the applicability of the Goa Money-Lenders Act, which provided a valid defense for the accused. The Court used its powers under Article 142 of the Constitution of India to ensure complete justice, given these circumstances.

Factor	Percentage
Payment of the cheque amount and compensation	60%
Inadequate consideration of the Goa Money-Lenders Act by the High Court	40%

Category	Percentage
Factual Aspects (Payment of cheque amount)	60%
Legal Considerations (Applicability of Goa Money-Lenders Act and Article 142)	40%

Key Takeaways

The Supreme Court can invoke Article 142 of the Constitution of India to compound offences and ensure complete justice, especially when the accused has already compensated the complainant.
High Courts must consider all valid defenses available to the accused, including the applicability of state money-lending laws, before reversing an acquittal.

Development of Law

The ratio decidendi of this case is that the Supreme Court, in exercising its powers under Article 142 of the Constitution of India, can compound an offence under Section 138 of the Negotiable Instruments Act if the accused has already paid the cheque amount and compensation. This decision reinforces the Court’s commitment to ensuring complete justice and provides a practical resolution in cases where the primary grievance has been addressed.

Conclusion

In Rajendra Anant Varik vs. Govind B. Prabhugaonkar (2025), the Supreme Court acquitted the accused, who had been convicted under Section 138 of the Negotiable Instruments Act. The Court invoked Article 142 of the Constitution of India to compound the offence, considering that the accused had already paid the cheque amount and compensation. This decision underscores the Court’s role in ensuring complete justice and resolving disputes effectively.

FAQ

What does this judgment mean for cheque bounce cases?
This judgment highlights that if an accused has already paid the cheque amount and compensation, the Supreme Court may use its powers under Article 142 to compound the offence, leading to acquittal.
What is Article 142 of the Constitution of India?
Article 142 grants the Supreme Court the power to pass orders necessary for doing complete justice in any cause or matter pending before it.
How does this case affect money-lending activities?
The case underscores the importance of complying with state money-lending laws. Courts must consider violations of these laws when deciding cases related to dishonored cheques.

Source: Rajendra Anant Varik vs. Govind B. Prabhugaonkar